Housing major part of downtown Rochester revival-D&C Article-July 18, 2014

When Zebulon Hounslea moved from New York City to Rochester about a year ago, he didn’t have to give up some of his favorite aspects of an urban life. Hounslea now lives in a sixth-floor apartment in the Lofts at Michaels-Stern, a building that was once home to a clothing factory downtown.

“It’s fantastic you can walk out in the street and have that hustle and bustle like Manhattan, but then you also have that kind of calm tranquilness of being able to see the city and yet see the country,” said Hounslea, whose apartment has brick walls, exposed beams, concrete floors and more.

The 35-year-old fashion designer is part of a growing number of people — primarily younger and unmarried or older and empty nesters — driving developers to convert aging buildings and former office and other spaces into new studios, lofts and even luxurious penthouses.

Hounslea has an expansive view of the east side of Rochester, and during the Xerox Rochester International Jazz Festival he could open a window and enjoy the music.

Transforming downtown

At least 15 projects that have housing components, and represent about $370 million worth of work, are under development in downtown Rochester. The two largest include plans for 180 units at Midtown Tower and about 150 in the Sibley Building.

The work signals a shift in the real estate world. For many years there was no market for the type of development now underway. But a mix of vision, financing and tax incentives is helping to bring the work to fruition. COMIDA (County of Monroe Industrial Development Agency) awarded $3.2 million in tax breaks to WinnCompanies for its work at the Sibley Building; OK’d an $18.6 million package for developers Larry Glazer and Robert Morgan for their Midtown Tower project; and just approved nearly $6.5 million in tax breaks for Glazer, Morgan and David Flaum for their Bausch + Lomb tower project.

The developers “understand that urban lifestyle that people are looking for,” said Heidi Zimmer-Meyer, president of the Rochester Downtown Development Corp. “They recognize you don’t go into an old building and rip it out and put false ceilings and vanilla boxes in there. They recognize that you’ve got to be able to celebrate that physical space differently.”

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It’s no secret that many local residents, particularly couples with children, still want to live in the suburbs, whether it’s for better performing schools, lower crime rates or other reasons.

But, while the current estimated population of Rochester — 210,358 — is about 9,000 less than it was in 2000, it’s still about 20,000 more than the 2005 estimate. And the number of residents living near the center of downtown has nearly doubled since 2000.

In 2013 there were 6,034 people living in 3,510 housing units, according to the Rochester Downtown Development Corp. About 800 new housing units are planned for the downtown area, which could add another 1,500 residents, Zimmer-Meyer said.

In 2005, 4,184 people lived downtown; in 2000, the number was about 3,200. Vacancy rates for rental properties in downtown dropped to 4.9 percent, according to a 2013 report by the development corp. That report also stated that Corn Hill Landing, the Temple Building, East End Lofts and the Lofts at Michaels-Stern combined had eight vacancies among their nearly 240 units.

“The increase in the number of people living downtown over the past 15 years is quite substantial,” said Kent Gardner, chief economist and research officer for the Center for Governmental Research in Rochester. “There is an interest in a different kind of housing.”

Hitting home

Bringing housing or apartments, lofts and townhomes into downtown areas isn’t a new trend. In fact, Rochester is only now joining the national trend, said Craig Burton, senior vice president of the commercial real estate group for First Niagara Bank.

“(People) seem to want to be downtown in order to take advantage of being close to things they want to do, whether it’s walking to restaurants or other types of entertainment,” he said. “We are active in financing these projects in all the upstate cities.”

At first, efforts to rehab aging buildings into residential units started slowly in Rochester, with brothers Jim and John Loftus renovating two industrial buildings. “People nationwide are kind of turning inward again,” said John Loftus. “It’s a new generation. Cities are definitely more attractive than they were 10 or 15 years ago.”

They would redevelop the Knowlton Building and the former Boise-Cascade envelope factory, both on Cascade Drive, into loft apartments and commercial spaces. They also created luxury apartments in Cascade Center, on North Washington Street.

“We were beginning to see some of this in the 1990s,” Zimmer-Meyer said. “There were projects that were being done, but as a lifestyle choice. It hadn’t really emerged nationally as part of the pop culture, and that began to happen around the turn of this century, around the year 2000.”

Before it caught on in Rochester, the reuse of old buildings was a common practice in New York City and other large urban settings.

“But in midsized cities like ours the prevailing wind for 60 years was suburban housing, tract housing,” Zimmer-Meyer said. “What has changed is the appetite by consumers, and that’s now emerged as a whole new market. For the first time we have cities that are growing faster than their surrounding suburbs in some cases. We’re seeing that here in Rochester, and the population loss is beginning to slow within the city.”

“Downtown is definitely coming back as a place to work with and play,” said Glazer, who is CEO and managing partner of Buckingham Properties. “There is an energy downtown that does not exist in the suburban areas.”

Glazer’s plans have included bringing a movie theater and a grocery store downtown, along with other commercial spaces. Others want to bring similar things downtown. Earlier this year, the city also made a request to the state for funds for a new performing arts center to be located downtown.

“It’s really a question of what comes first,” Glazer said. “Retail follows rooftops is the old expression. If we get enough residential momentum, which is happening, restaurants start coming along. When restaurants start coming along, services start coming along.”

Patrick Dutton, a partner in a recently announced project called Woodbury Place, said there is a strong demand for more apartments downtown.

“I just think it’s really long overdue in Rochester,” he said. “You’re just seeing project after project getting introduced downtown and they get absorbed so quickly.”

On July 8, plans were announced to create loft apartments in five buildings that were the former home of Merkel-Donohue near Court Street and South Avenue. Dutton also worked on Capron Street Lofts and is a partner in another project to create lofts at the Bevier Memorial Building on South Washington Street.

“People are finding that living in the suburbs, you have to get in your car to go everywhere,” he said. “It’s very nice when you just don’t have to get in your car. If you can walk out your front door and have an assortment of things to do and places to go, that’s appealing in and of itself. I think part of it is suburbia really isn’t all that convenient.”